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Herding the Mutual Fund Managers in the Athens Stock Exchange

Author

Listed:
  • Nikolaos Theriou
  • George Mlekanis
  • Dimitrios Maditinos

Abstract

Behavioural finance is a paradigm receiving great attention in the last decades and shaking the foundations of modern finance. A broadly discussed behavioural bias is herding, i.e. the tendency of investors to imitate each others’ decisions. Herding is a phenomenon with far-reaching implications for financial markets, but its importance becomes even larger if it is exhibited by institutional investors. The present study attempts to investigate whether mutual fund managers in Greece herd when investing in the Athens Stock Exchange in the period 2001 – 2006. For this purpose, semi-annual portfolio holdings of 31 mutual funds are analysed using the methodology proposed by Lakonishok et al. (1992). The study concludes that mutual fund managers undoubtedly herd, with the extent of herding being irrelevant to the price movements observed in the market. Managers herd primarily when they trade in large capitalisation stocks or stocks that belong to the most “famous” indices.

Suggested Citation

  • Nikolaos Theriou & George Mlekanis & Dimitrios Maditinos, 2011. "Herding the Mutual Fund Managers in the Athens Stock Exchange," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 131-154.
  • Handle: RePEc:ers:journl:v:xiv:y:2011:i:4:p:131-154
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    References listed on IDEAS

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    More about this item

    Keywords

    Behavior Finance; Herding; Mutual Funds; Institutional Investors;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing

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